Most things in life go in cycles and this is especially true of the economy. As we approach another recession, DPAS Business Development Manager, Ian Eslick, spoke to accountant, Alan Suggett, to see what advice he has for dentists.
Ian : You and I have both been here before, with recessions, Alan, and we’ve got through them. So, in your experience of dealing with dentists during the last recession, what were the key learnings that you could share?
AS: So, although we’re entering a recession and it seems like the end of the world, my experience of recessions is they do not last forever. So, perhaps we should adopt a more positive mindset. The experience last time was that a very, very small number of private practices went under.
I think in terms of the current recession, most dental practices are in a far better place than they were last time round. That’s because last time round it was very easy for private practice patients on capitation plans to say “I’ve got to cancel one of my monthly subscriptions. Will it be my Sky subscription, or will it be my Practice Plan subscription?” and they could decide to keep Sky and go to an NHS dentist and then come back onto the private plan when things improved. Well, good luck in finding an NHS dentist now.
So, in fact, comparing what happened in the last recession with now, I think there is more protection for dental practices this time round. I think private practices lost some patients last time, but this time, because of the parlous state of NHS dentistry in the UK, I don’t think that’s as likely to happen. So that’s a ray of light, I think.
If we’re looking backwards to try and get some sort of experience of last time to use this time, I actually think it’s really difficult but, as we’ve touched on before, things can only get better, it doesn’t last forever.
And, if you’re a practice in a really bad position where you’ve got a mountain of debt, you have no cash, your profits are declining, you are in danger of going bust, then that is a terrible situation, and you need more detailed help. However, for the majority it will be a case of making less money for a while. That’s not great, but it’s not the end of the world. You’ll still be around to be able to recover and come out the other side.
IE: Thanks, Alan. That chimes with what I’ve been seeing when I’ve been in practices. Do you have any words of advice about steps practices can take to weather this storm?
AS: I’ll start off with words for an NHS-only practice. You’re in a difficult position here because you can’t put your prices up as they’re set by the government. It’s possible that there’ll be things that the NHS will do to help since the Secretary of State for Health changed. So, if something comes out, that’s good, but there’s not a lot that we, or practice owners can do in relation to NHS activities.
However, with private practices, that’s where it gets interesting. Having spoken to lots of practice owners over the years about the possibility of increasing private income or persuading patients to go from NHS to private, I am aware how much angst that can cause practice owners because of the perceived risk. We all have different attitudes to risk, but I know from the feedback that your team has given to me, Ian, and what my colleagues have told me, there’s never been a better time to convert from NHS to private and the risk seems to be much lower.
The message about three or four years ago was it’s difficult to have a private conversion of your NHS patient list unless you’ve had personal contact with those patients for around three years. I understand that such is the mayhem now, that sort of warning shot is no longer needed. So, the changeover is easier.
Looking at the sorts of decisions and choices practices can make, as well as whether to convert fully to private or just go for a partial one, there’s also pricing to consider. For a fully private practice, considering putting prices up can be quite worrying. I know from talking to dentists and business owners generally, the first thing that most of them will say to me when we’re talking about this topic will be, “If I put my prices up by 10%, I will lose a lot of my customers/patients and I’m worried about that.” In business, there’s a mantra: ‘what you can measure, you can manage’. So, therefore, if you’re worried about, ‘what will happen if I put my prices up?’ Or if you want to bring in some new strategy in the practice, remember, if you can measure things, then you can manage them.
However, what owners need in a case like this is reassurance. Because if it’s the case that a 10% increase in prices, would mean you only lose 30% of your customers, you’re still better off. So, if I was on the receiving end of that advice, I’d be thinking, “Well, I’m not going to lose 30% of my customers. I’m now comfortable about doing it.” I believe you have these types of conversations with practices, Ian.
IE: Yes, we have a lot of those conversations with practices when it comes to fee increase times. Rightly so, there are concerns around what may happen, but we want to help practices with that thought process. We help practices to get some sort of gut feeling when it comes to an increase in prices and how many customers they’d have to lose to be worse off, to hopefully give them that reassurance to take the decision to put prices up.
You also mentioned about NHS conversions and the factors we consider would make a successful conversion have changed so much over the last couple of years. You’re right to say just because someone’s not been in post for long, or they’ve not had the patient base for a certain length of time, that the risks were higher but now it has changed completely.
We have dentists who have converted with no associates in post and had great results. This is because people are realising there aren’t many options and they would rather belong somewhere than nowhere, so it just makes them feel more secure. So, I would encourage people that are feeling nervous about what’s happening and thinking it’s possibly the wrong time for them to change the model of their business to explore their options, because we are getting some really positive results and we’re really proud of the work we do around that.
Thanks for your time, Alan
About Alan
Alan is a Specialist Dental Accountant. After 13 successful years as a partner and Head of UNW Dental, Alan moved into a consultancy role for the firm in 2022.
Prior to Alan’s change of role, he was a member of NASDAL (National Association of Specialist Dental Accountants and Lawyers), where he sat on the Technical Committee and was the Chair of the Superannuation Committee, and prepared the NASDAL quarterly survey of Goodwill values. He is also a member of ASPD (Association of Specialist Providers to Dentists).
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